A Twitter user shared the GDP contraction figures of five countries for the first financial quarter from April-June 2020. It claims that the Gross Domestic Product (GDP) of Canada (-38.7%), Japan (-27.8%), and the United States (-32.9%) have contracted more than India (-23.9%).
Using the handle @ProNaMoSeva the user further states that car sales are up by 20% YoY for August. The tweet reads:
GDP contraction worldwide in Q1
•USA -32.9 %
Good News on Indian Economy. Car Sales up by 20% YoY for August..
This is Huge..
Forget 23% contraction , that was first Quarter. This is Latest news”
Other social media users have shared this claim as well.
IndiaToday in its special show News Unlocked With Rajdeep Sardesai aired an infographic, which shows the economy of the United States as represented by its GDP, contracted by 32.9%. This was worse than India’s contraction of 23.9% and the five other countries mentioned.
Fact Check/ Verification
Recently, India reported a 23.9% fall in its GDP for the April-June quarter (Q1)—the worst quarterly contraction on record. Around the same time, news on the GDP of other major economies of the world was also reported.
It was around this time that various social media users claimed that the GDP of Canada, United States, and Japan contracted more than India’s.
First, let’s note that the contraction or growth of the United States’ GDP is calculated differently than India’s. Therefore, the comparison of GDPs of the two countries in the claim is wrong.
Economic commentator Vivek Kaul in a recent blog post explained that “the Indian comparison is a year on year one and not a comparison with the previous quarter. The US comparison is a quarter on quarter comparison which is then annualised.”
He further states, “If the US were to report the GDP growth/contraction in the same way as India, its GDP during April to June 2020 contracted by 9.1% in comparison to the GDP between April to June 2019. The Indian economy contracted by 23.9% during the same period. That’s the right comparison.”
The United States Bureau of Economic Analysis (BEA) explains why it publishes per cent changes in quarterly series at annual rates here. Therefore, as per BEA’s second estimate released on 27 August, the quarterly non-annualised contraction of the United States is at 9.1%.
Here’s another explainer on the two US GDP figures doing its rounds on social media.
GDP Comparison To Other Countries
If we’re to compare economic growth or contraction as represented by the GDP’s of Canada, Japan, and the United Kingdom (other countries mentioned in the claim) to India, we would use the following year-on-year data in the same time period:
United Kingdom: -21.7%
LiveMint reported on India’s internationally comparable quarter-on-quarter GDP figures by IMF chief economist Gita Gopinath. You can read more about it here.
Our research makes it clear that the claim which states the GDP of Canada, Japan, and the United States has contracted more than India’s is misleading. The figures do not represent a year on year calculation of the country’s GDP, which is how the Indian economic growth or contraction is calculated.
India’s Ministry of Statistics & Programme Implementation
Economic Commentator Vivek Kaul
United States Bureau of Economic Analysis
United States Bureau of Economic Analysis’s Second Estimate
New York Times report